Catholic Benefits Association LCA et al v. Burwell et al

Filing 40

ORDER granting in part and denying in part 30 Motion for Preliminary Injunction, as more fully set out. Signed by Honorable David L. Russell on 12/29/14. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
THE CATHOLIC BENEFITS
ASSOCIATION LCA; THE
CATHOLIC INSURANCE
COMPANY,
Plaintiffs,
v.
SYLVIA M. BURWELL,
Secretary of the United
States Department of Health
and Human Services et al.,
Defendants.

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Case No. CIV-14-685-R

ORDER
Before the Court is Plaintiffs’ Motion for Preliminary Injunction. Doc. No. 30.
This motion stems from an action challenging a provision of the Affordable Care Act
(“ACA”)1 and the regulations issued under it, which mandate that certain employers
provide health coverage for contraceptives to their employees, or face substantial fines
for failing to do so (“the Mandate”). On June 4, 2014, the Court entered an Order
enjoining Defendants from “any effort to apply or enforce, as to [certain] members of the
Catholic Benefits Association LCA” the provisions of the ACA requiring them to provide
their employees health insurance coverage for contraceptives. Catholic Benefits Ass’n

1

The ACA is composed of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124
Stat. 119 (2010), and the Health Care and Education Reconciliation Act, Pub. L. No. 111-152, 124 Stat.
1029 (2010).

LCA v. Sebelius, 2014 WL 2522357, at *10 (W.D. Okla. June 4, 2014).2 Plaintiffs filed
this motion for preliminary injunction for two reasons: (1) to protect Catholic employers
that have joined and continue to join the Catholic Benefits Association LCA (“CBA”)
after June 4 that are not covered by the Court’s June 4 Order, and (2) to protect all CBA
members from the interim final regulations issued by the Department of Health and
Human Services (“HHS”), Labor, and the Treasury (“the Departments”) on August 27,
2014. Doc. No. 33, at 8.
CBA is an Oklahoma nonprofit limited cooperative association that was organized
in relevant part to assist Catholic employers in providing health benefits to their
respective employees in a manner consistent with Catholic values. Doc. No. 32, ¶ 31.
CBA members “adhere in belief and practice to the teachings of the Catholic Church on
contraception, abortion, sterilization, and related counseling.” Doc. No. 32, ¶ 82. They
assert that the Mandate violates their sincerely held religious beliefs. Id. ¶ 289. Plaintiffs
have brought this action against Sylvia Burwell, Secretary of the U.S. Department of
Health and Human Services, along with other government officials and agencies,
advancing constitutional and statutory challenges to the Mandate. In the present motion,
Plaintiffs seek a preliminary injunction on behalf of certain CBA members against
Defendants’ collective ability to enforce the Mandate against them, basing their
arguments on the Religious Freedom Restoration Act (“RFRA”), the Establishment
Clause, and the Administrative Procedure Act (“APA”). Doc. No. 30, at 2.
2

This June 4 Order was entered in a case with substantially the same parties as the present case.
Following this Court’s June 26 Order denying the plaintiffs’ motion to amend the June 4 Order to extend
preliminary injunctive relief to members that have joined Catholic Benefits Association LCA since June
4, Plaintiffs filed this separate action in order to obtain such relief. Doc. No. 32, ¶¶ 24-26.
2

I.

ACA
Under 42 U.S.C. § 300gg-13(a)(4), certain employer health plans must cover

“preventive care and screenings” for women. Based on the guidelines adopted by the
Health Resources and Services Administration, “preventive care” includes “[a]ll Food
and Drug Administration approved contraceptive methods, sterilization procedures, and
patient education and counseling for all women with reproductive capacity.” Health
Resources & Services Administration, “Women’s Preventive Services Guidelines,”
http://www.hrsa.gov/womensguidelines (last visited Dec. 18, 2014). If an employer
subject to the Mandate fails to provide the required contraceptive coverage in its health
plan, then it faces fines of $100 per day per employee, or, in other words, up to $36,500
per year per employee. See 26 U.S.C. § 4980D(b)(1). Further, if the employer fails to
provide any health plan whatsoever to its employees, it faces fines of $2,000 per year per
full-time employee (less 30 employees). Id. § 4980H(a), (c)(1), (c)(2)(D)(i)(I).
The regulations and guidelines issued under the Mandate provide an exemption for
certain “religious employers.” 45 C.F.R. § 147.131(a); 79 Fed. Reg. 51,092-01; 51,092.
For purposes of the regulations, “religious employer” is narrowly defined as a nonprofit
entity referred to in 26 U.S.C. § 6033(a)(3)(A)(i) or (iii), part of the Internal Revenue
Code. 45 C.F.R. § 147.131(a); 78 Fed. Reg. 39,870, 39,873-74. The groups referred to in
those subsections include “churches, their integrated auxiliaries, and conventions or
associations of churches,” and “the exclusively religious activities of any religious
order.”

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The regulations further provide for an accommodation for certain non-exempt
employers that do not want to provide coverage for the required contraceptive services
based on religious objections. 78 Fed. Reg. 39,870-01; 39, 874. An employer is an
“eligible organization” for this accommodation if it satisfies the following requirements:
(1) it opposes providing coverage for some or all of the required contraceptive services
due to religious objections; (2) it is a nonprofit entity; (3) it “holds itself out as a religious
organization;” and (4) it “self-certifies, in a form and manner specified by the Secretaries
of Health and Human Services and Labor, that it satisfies the [previous three] criteria.” 26
C.F.R. § 54.9815-2713A(a); 29 C.F.R. § 2590.715-2713A(a); 45 C.F.R. § 147.131(b); 78
Fed. Reg. at 39,874.
At the time the Court issued its June 4 Order, in order to meet the self-certification
requirement, an employer had only one option. It had to execute and deliver EBSA Form
700 to its issuer, or if the employer was self-insured, to its third-party administrator
(“TPA”). 78 Fed. Reg. at 39,875.

If a nonprofit religious employer executed and

delivered EBSA Form 700 to its issuer or TPA, the issuer or TPA would then provide
notice to the organization’s employees that it would be providing contraceptive services
to these employees. 26 C.F.R. § 54.9815-2713A(d); 29 C.F.R. § 2590.715-2713A(d); 45
C.F.R. § 147.131(d).
On July 3, 2014, the Supreme Court issued an interim order in Wheaton College v.
Burwell, 134 S. Ct. 2806, 2807 (2014), holding that the college “need not use the form
prescribed by the Government, EBSA Form 700, and need not send copies to health
insurance issuers or third-party administrators” in order to obtain a preliminary injunction
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against enforcement of the Mandate. It is sufficient if the college “informs the Secretary
of Health and Human Services in writing that it is a nonprofit organization that holds
itself out as religious and has religious objections to providing coverage for contraceptive
services.” Id.
“[I]n light of” this interim order, on August 27, 2014, the Departments issued
interim final regulations to “augment” the above regulations. 79 Fed. Reg. 51,092-01,
51,092. In addition to submitting ESBA Form 700 to its issuer or TPA, the new rules
provide for an additional process by which an organization may notify HHS directly in
writing of its religious objection. 26 C.F.R. § 54.9815-2713AT(c)(1); 29 C.F.R.
§ 2590.715-2713A(c)(1); 45 C.F.R. § 147.131(c)(1); 79 Fed. Reg. at 51,094. This notice
must include the organization’s name; the basis on which it qualifies for the
accommodation; the nature of its objection; the plan name and type; and the name and
contact information for the plan’s TPAs and health insurance issuers. 26 C.F.R.
§ 54.9815-2713AT(c)(1)(ii); 29 C.F.R. § 2590.715-2713A(c)(1)(ii); 45 C.F.R.
§ 147.131(c)(1)(ii); 79 Fed. Reg. at 51,094-95.
This above information is “the minimum information necessary for the
Departments to determine which entities are covered by the accommodation, to
administer the accommodation, and to implement the policies in the July 2013 final
regulations.” 79 Fed. Reg. at 51,095. Once the objecting organization provides such
notice, it need not “contract, arrange, pay, or refer for such coverage.” 79 Fed. Reg. at
51,095. After the organization sends its notice to HHS, the Department of Labor will
send a notification to the plan’s issuer or TPA, informing them of the organization’s
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religious objection and of the issuer’s or TPA’s obligations regarding contraceptive
benefits. 26 C.F.R. § 54.9815-2713AT(c)(1)(ii); 29 C.F.R. § 2590.715-2713A(c)(1)(ii);
45 C.F.R. § 147.131(c)(1)(ii); 79 Fed. Reg. at 51,094-95. These obligations include the
responsibility to provide the contraceptive services that the objecting organization objects
to providing. 26 C.F.R. § 54.9815-2713AT(b)(2); 29 C.F.R. § 2590.715-2713A(b)(2); 45
C.F.R. § 147.131(d); 79 Fed. Reg. 51,092-01; 51,095. Plaintiffs argue that this new
process still imposes a substantial burden on CBA members’ exercise of their religious
beliefs, because the effect is the same: they must still initiate the process that results in
the insurers or TPAs providing contraceptive coverage to their employees. Doc. No. 31,
at 12-13.
II.

Standard
To prevail on their Motion for Preliminary Injunction, Plaintiffs must show: “(1) a

likelihood of success on the merits; (2) a likely threat of irreparable harm to the
movant[s]; (3) the harm alleged by the movant[s] outweighs any harm to the non-moving
party; and (4) an injunction is in the public interest.” Hobby Lobby Stores, Inc. v.
Sebelius, 723 F.3d 1114, 1128 (10th Cir. 2013), aff’d, Burwell v. Hobby Lobby Stores,
Inc., 134 S. Ct. 2751 (2014) (citing Winter v. NRDC, 555 U.S. 7, 20 (2008)). Because this
preliminary injunction seeks to alter the status quo, Plaintiffs must make a “strong
showing both with regard to the likelihood of success on the merits and with regard to the
balance of harms.” Awad v. Ziriax, 670 F.3d 1111, 1125-26 (10th Cir. 2012) (quoting
Summum v. Pleasant Grove, 483 F.3d 1044, 1048-49 (10th Cir. 2007), rev’d on other

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grounds, 555 U.S. 460 (2009)). For irreparable injury and public interest, Plaintiffs must
show only that these two requirements weigh in their favor. Id. at 1126.
III.

Analysis
A. Likelihood of Success on the Merits Under RFRA
Under RFRA, the federal government is prohibited from substantially burdening a

person’s exercise of religion, unless the government can demonstrate that the challenged
action “constitutes the least restrictive means of serving a compelling government
interest.” Hobby Lobby, 134 S. Ct. at 2759. Therefore, in order to establish a claim under
RFRA, a plaintiff must first show “that the government substantially burdens a sincere
religious exercise.” Hobby Lobby, 723 F.3d at 1125-26 (citation omitted). If the plaintiff
can establish this, then the burden shifts to the government “to show that the ‘compelling
interest test is satisfied through application of the challenged law to the person—the
particular claimant whose sincere exercise of religion is being substantially burdened.’”
Id. at 1126 (quoting Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546
U.S. 418, 420 (2006)) (internal quotation marks omitted). This burden-shifting
framework applies even at the preliminary injunction stage. Id. (citing Gonzales, 546
U.S. at 429). In this case, Defendants do not challenge the sincerity of CBA members’
religious beliefs. But Defendants do argue that their religious beliefs are not substantially
burdened, and, even if they are substantially burdened, the government can satisfy the
compelling interest test.

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1. Substantial Burden
The Court will first determine if the government’s enforcement of the challenged
provisions of the ACA and accompanying regulations imposes a substantial burden on
CBA members’ exercise of their religion. Under RFRA, an act by the government
imposes a substantial burden on religious exercise if it “(1) requires participation in an
activity prohibited by a sincerely held religious belief, (2) prevents participation in
conduct motivated by a sincerely held religious belief, or (3) places substantial pressure
on an adherent . . . to engage in conduct contrary to a sincerely held religious belief.”
Hobby Lobby, 723 F.3d at 1138 (quoting Abdulhaseeb v. Calbone, 600 F.3d 1301, 1315
(10th Cir. 2010)) (internal quotation marks omitted). Only the third prong concerning
“substantial pressure” is applicable in this case. See id.
CBA members believe in the Catholic teaching that any artificial interference with
the creation and nurture of new life is wrong. Doc. No. 32, ¶ 5. Thus, it would be contrary
to this belief for them to provide health benefits to their employees that include coverage
for contraception, abortion-inducing drugs and devices, surgical abortion, sterilization,
and related counseling. Id. Furthermore, they believe that the accommodation, both preand post-augmentation, forces them to play a central role in the provision of the
contraceptive services to which they religiously object. Plaintiffs argue that both
accommodations require CBA members to cause another “to provide that which their
Catholic faith will not permit.” Doc. No. 33, at 18. The crux of their objection to the
alternative process provided in the final interim regulations is that their notice to HHS of
their religious objection to the Mandate “trigger[s] government action modifying their
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own plans and causing their third party administrators … or group insurers to deliver
[contraception] services to their plan beneficiaries.” Id. at 9. This, in their view,
constitutes “material cooperation with evil because of the cascading effects.” Id. at 17-18.
In response, Defendants argue that the Sixth and Seventh Circuits (and now the
D.C. Circuit) have rejected the “trigger theory” that Plaintiffs advance. Doc. No. 36, at
14. In University of Notre Dame v. Sebelius, 743 F.3d 547, 554 (7th Cir. 2014), the
Seventh Circuit held that the certification requirement, as it stood prior to the August
2014 augmentation, did not substantially burden the plaintiff’s religious beliefs because
“[f]ederal law, not the religious organization’s signing and mailing the form, requires
health-care insurers, along with third-party administrators of self-insured health plans, to
cover contraceptive services.” Accord Priests for Life v. United States Dep’t of Health &
Human Servs., 772 F.3d 229, 252-53 (D.C. Cir. 2014); Michigan Catholic Conference &
Catholic Family Servs. v. Burwell, 755 F.3d 372, 389 (6th Cir. 2014). The Eleventh
Circuit disagrees. See Eternal World Television Network, Inc. v. Sec’y of the United
States Dep’t of Health & Human Servs., 756 F.3d 1339, 1347 (11th Cir. 2014) (“Even if
the form alone does not ‘trigger’ coverage—whatever that means—it is undeniable that
the United States has compelled the Network to participate in the mandate scheme by
requiring the Network not only to sign but also to deliver the form to its third-party
administrator of its health insurance plan.”).
The Court agrees with the Eleventh Circuit and finds its conclusion equally
applicable to the August 2014 interim final rules. Regardless of whether the federal
government has an independent obligation to provide contraceptive services when CBA
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members decline to provide it, and also decline to participate in the notification process,
the analysis remains the same. “First, we must identify the religious belief …. Second, we
must determine whether this belief is sincere…. Third, we turn to the question of whether
the government places substantial pressure on the religious believer.” Hobby Lobby, 723
F.3d at 1140. The question of what, if anything, is actually required to activate
employees’ right to cost-free contraceptive services is inapposite. “[T]his is not a
question of legal causation but of religious faith,” Notre Dame, 743 F.3d at 566 (Flaum,
J., dissenting), and the Court is not authorized “to say that the religious beliefs of the
plaintiffs are mistaken or unreasonable,” Hobby Lobby, 134 S. Ct. at 2757.
This case is distinguishable from both Hobby Lobby and Wheaton College,
because in neither of those cases did the plaintiffs argue that they had a religious
objection to the act of notifying the government of its religious objection. Defendants’
repeated assertions that CBA’s members are “effectively exempt,” see, e.g., Doc. No. 36,
at 5, demonstrate their misunderstanding regarding the religious belief at issue. Although
CBA members may be “effectively exempt” from directly providing contraceptive
services if they comply with the notification requirement, they are not exempt from the
notification requirement itself. This requirement also violates their religious beliefs
because, they argue, it requires them to be complicit in indirectly providing their
employees with contraceptive services.
Thus, under the challenged regulations, CBA members have five options from
which to choose: (1) directly provide contraceptive coverage to their employees; (2)
refuse to provide the coverage and face severe monetary penalties; (3) completely drop
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their employees’ health plans and face monetary penalties for doing so; (4) self-certify
that they qualify for the accommodation by filling out EBSA Form 700; or (5) notify
HHS that they qualify for the accommodation and provide the required information.
Because options (1), (4), and (5) violate their religious beliefs, the only alternatives
offered in options (2) and (3), paying monetary penalties, create a Hobson’s choice for
CBA members. See Hobby Lobby, 723 F.3d at 1141.
The August 2014 augmented regulations thus do not remove the substantial
burden placed on CBA members by the notification requirement. There remains a
substantial burden on the religious beliefs of CBA members that meet the definition of
“eligible organization” for purposes of the accommodation (“Group II members”), as
well as those members that are closely-held for-profit corporations that are neither
exempt from the Mandates, nor qualify for the accommodation (“Group III members”).3
2. Compelling Interest
Because Plaintiffs have made a strong showing of a substantial burden,
Defendants must now show that they are likely to pass the compelling interest test. In
Hobby Lobby, the Tenth Circuit held that the government’s articulated interests “in public
health and … gender equality … do not satisfy the Supreme Court’s compelling interest
standards.” 723 F.3d at 1143-44. In the same case, the Supreme Court assumed without
deciding that the regulations at issue satisfy the compelling interest test. Hobby Lobby,

3

See Hobby Lobby, 134 S. Ct. at 2775. Consistent with its June 4 Order, the Court finds that those CBA
members that meet the ACA’s definition of “religious employer,” and are thus exempt from the Mandate
(“Group I members”), are not substantially burdened by the Mandate or the subsequent regulations. See
Catholic Benefits, 2014 WL at *7, 10.
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134 S. Ct. at 2780. Defendants argue that in Hobby Lobby, five Justices found the
compelling interest test to be satisfied. Doc. No. 36, at 16.
In Hobby Lobby, Justices Ginsburg, Sotomayor, Breyer, and Kagan dissented and
concluded that the government satisfied the compelling interest test. Hobby Lobby, 134 S.
Ct. at 2799 (Ginsburg, J., dissenting). Whether Justice Kennedy came to the same
conclusion in his concurrence is unclear. He devoted one paragraph to the issue, and
stated that HHS “makes the case that the Mandate serves the Government’s compelling
interest in providing insurance coverage that is necessary to protect the health of female
employees.” Id. at 2785 (Kennedy, J., concurring). He further noted that “[t]here are
many medical conditions for which pregnancy is contraindicated.” Id. at 2786 (citation
omitted). Even assuming Justice Kennedy did find that the government had established a
compelling interest, because the other Justices in the majority simply assumed that fact
without fully debating the issue, this Court is not bound by the Justices’ conclusions on
this issue. See Cent. Virginia Cmty. College v. Katz, 546 U.S. 356, 363 (2006) (“[W]e are
not bound to follow our dicta in a prior case in which the point now at issue was not fully
debated” (citation omitted)). Thus, the Tenth Circuit’s ruling that the government has not
satisfied the compelling interest test is binding on this Court, and Plaintiffs have
consequently shown a likelihood of success on the merits of their RFRA claim.

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B. Likelihood of Success on the Merits Under the Establishment Clause and the
APA
Because the Court has found that Plaintiffs have shown a likelihood of success on
the merits under RFRA, the Court declines to address their claims under the
Establishment Clause and the APA.
C. Remaining Requirements for Preliminary Injunction
In addition to showing a likely RFRA violation, Plaintiffs must also satisfy the
three remaining requirements for a preliminary injunction. First, “establishing a likely
RFRA violation satisfies the irreparable harm factor.” Hobby Lobby, 723 F.3d at 1146
(citations omitted). Second, the harm to CBA members outweighs any harm to
Defendants’ interest in enforcing the challenged regulations. Defendants contend that
there is an inherent harm in prohibiting them from enforcing the challenged regulations
against CBA members. Doc. No. 36, at 27. Yet Defendants have already exempted health
plans covering millions of others, including those plans of many religious organizations.
Hobby Lobby, 723 F.3d at 1143. This brings into question how tangible the harm could
possibly be by the Court’s entry of a preliminary injunction in Plaintiffs’ favor. By
comparison, the harm posed to these Plaintiffs absent relief is quite tangible—they will
either face severe monetary penalties or be required to violate their religious beliefs.
Finally, “it is always in the public interest to prevent the violation of a party’s
constitutional rights,” and the same is true of RFRA violations. Hobby Lobby, 723 F.3d at
1147 (quoting Awad, 670 F.3d at 1132) (“[A]lthough RFRA violations are not
constitutional violations, Congress has given RFRA similar importance by subjecting all

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subsequent congressional enactments to a strict scrutiny standard of review unless those
enactments explicitly exclude themselves from RFRA.” (citing 42 U.S.C. § 2000bb3(b))). Accordingly, Plaintiffs have satisfied all four requirements for a preliminary
injunction.
IV.

Extension Beyond Current CBA Members
Plaintiffs ask the Court to grant preliminary injunctive relief for all present and

future CBA Members that have joined or will join CBA after June 4, 2014. Doc. No. 31,
at 32. Consistent with its June 4 Order, the Court extends preliminary relief only to
current CBA members that fit within Groups II and III.4 That is, only current members of
CBA that either qualify for the accommodation as nonprofit religious employers, or those
members that are non-exempt closely-held corporations and thus do not qualify for the
accommodation, are entitled to preliminary relief.
V.

Conclusion
In accordance with the foregoing, Plaintiffs’ Motion for Preliminary Injunction is

GRANTED in part and DENIED in part. Although Group I members of CBA are not
entitled to preliminary injunctive relief, current Group II and Group III members of CBA
are entitled to such relief based on Plaintiffs’ RFRA challenge.

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All current Group II and Group III members of CBA were required to meet certain requirements in order
to be eligible for membership, as set out in CBA’s Articles of Organization and Bylaws. See Doc. No. 32,
¶¶ 36-39. The Court is satisfied that these tests have ensured the uniformity of belief among the current
Group II and Group III members to which this preliminary relief will extend. If Defendants do not object
to including within the scope of this preliminary injunction future CBA Group II and Group III members,
they are directed to file such a notice with the Court.
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PRELIMINARY INJUNCTION
Defendants, their agents, officers, and employees, and all others in active concert
or participation with them, are hereby ENJOINED AND RESTRAINED from any effort
to apply or enforce, as to current members of the Catholic Benefits Association LCA who
qualify for the accommodation (Group II members), as defined by 26 C.F.R. § 54.98152713A(a), 29 C.F.R. § 2590.715-2713A(a), and 45 C.F.R. § 147.131(b), or that are
closely-held for-profit corporations that neither qualify for the “religious employer”
exemption nor qualify for the accommodation (Group III members), the substantive
requirements at issue in this case that are imposed by 42 U.S.C. § 300gg-13(a)(4) and its
related regulations, including any penalties, fines and assessments for noncompliance
with these provisions, until further order of the Court.
Defendants, their agents, officers, and employees, and all others in active concert
or participation with them, are FURTHER ENJOINED AND RESTRAINED from any
effort to apply or enforce the Mandate against group insurers and third-party
administrators of current Group II and Group III members and from interfering with these
members’ attempts to arrange or contract for morally compliant health or stop-loss
coverage or related services for their employees.
IT IS SO ORDERED this 29th day of December, 2014.

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